June 9th, 2021 6:09pm
As I scroll through the wallstreetbets subs, all I see are a bunch of SMUCKS saying to do this or to do that without any actual knowledge of the stock they are talking about. Everybody seems so cool buying calls, puts, naked options, rolling their positions, heck I wouldn’t be surprised if they started creating butterfly spreads without even knowing it. People seem to forget that options trading is actually an extremely risky investment product, Peter Lynch himself said "It’s hard enough to make money in regular stocks" hence why he doesn’t trade options.
I’m not writing this to discourage any activity because I am the first to advocate that everybody should have money in the stock market. Although, what I want to advocate is for you to understand the risks that are associated with the financial products that you’re trading. For example, what makes options so risky is the time variable, not only do your options have to be in-the-money but they need to be in the money before the expiration on your contract. That time constraint basically turns option contracts into gambling because you cannot predict where the price will be tomorrow. You need to be careful with the amount of money that you’re using in relevance to your overall wealth, you cannot go all in on these bets because if you lose it all you will be sick to your stomach. What makes all of this even more risky is when people use margin to increase their position. DO YOUR RESEARCH.
I just want everybody to be careful and happy at the end of the day!
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June 9, 2021 at 04:07PM